A recent media report by The Star on April 2, 2016, which said that Malaysia's household debt-to-gross domestic product (GDP) ratio increased to 89.1 percent as of 2015 from 86.8 percent, is quite alarming. The report also stressed that at 89.1 percent, Malaysia has one of the highest household debts in the region. Malaysia’s household debt to GDP ratios have almost doubled between 2008 and 2015.
The Malaysian Trades Union Congress (MTUC) sees this figure as one of the most alarming development, and that the risk of high household debt may worsen as the nation is facing difficult economic situation.
In current environment where our daily expenses also on the rise, MTUC is also concerned that the ability of workers to settle their debt will be affected and also would contribute to other negative elements and would directly impact their daily life.
As analysts pointed out clearly, we need to take proactive measures to ensure something similar to the US subprime crisis does not happen.
It is MTUC's hope that the government and financial institutions will introduce workers friendly schemes in order to reduce the household debt. At the same, MTUC hope that employers also will take proactive measures to reduce the burden of their respective staff including increasing the employer-portion of the Employees Provident Fund (EPF) contribution and at the same give the salary increment and relook monthly allowances including cost of living allowance (COLA).
MTUC believes that every employee should have a reasonable salary and good take home pay. Lately, we hear complaints from workers that the net take-home salary is insufficient to cope with rising living costs.
If this situation persists, household debt will continue to rise and indirectly it will burden the workers and the nation.
N GOPAL KISHNAM is secretary-general, Malaysian Trades Union Congress (MTUC).